Finance

Nisha Gopalan is a Bloomberg Gadfly columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.

For China's banks, still coping with meager profit gains and bad debt, another problem is emerging: losing talent.

While the overall percentages may look tiny -- staff numbers at the nation's top four lenders are down 1.5 percent from the end of 2015 -- we're talking thousands of jobs. China Merchants Bank has been among the most aggressive, shedding 10.2 percent of its workforce in the first half. Combined, eight of China's largest banks saw personnel dwindle by 34,739 over the period, DBS Vickers research shows.

Exodus
Staff numbers at China's top eight banks are falling as employees seek opportunities elsewhere
Source: DBS Vickers, Company reports
Note: Banks include ICBC, CCB, Bank of China, AgBank, BoCom, China Merchants, Citic and Minsheng. Data include outsourced or dispatched employees.

Much of the reduction is a result of natural attrition, although there has been some job culling as banks automate processes and cope with stagnant top-line growth. State-owned lenders also can't lay off staff as easily as their Western counterparts. Lenders such as Agricultural Bank of China, which has a staggering 489,486 people on its payroll, have a responsibility to maintain employment because social stability is the government's first priority. As DBS Vickers analyst Shujin Chen noted, compared to other industries, China's banking sector is "profitable even during an economic downturn."

The bigger issue lies with remuneration. State-owned banks pay about 40 percent less than other Chinese lenders and well below brokerages. Maximum salaries at the nation's brokerages come in at around 770,000 yuan ($115,360) a year compared with 423,000 yuan at joint-stock banks and 245,000 yuan at government-owned lenders. Combined staff compensation costs, including bonuses, at China's big four banks fell 2.6 percent from a year earlier.

In the West, junior bankers get a starting salary of around $90,000, and as Goldman Sachs Chairman and CEO Lloyd Blankfein's $30 million pay package in 2015 showed, the sky's the limit.

Figures like that make it easy to see why putting in the hard yards at a Chinese state-owned lender isn't that attractive anymore. Those jobs, once dubbed "golden bowls" because they were the source of a cushy living and steady income, have lost their luster. Career advancement, prestige, stock options or the excitement of working for a startup are all reasons people are up and leaving. Shanghai-based Dianrong.com, an online financial services company established in 2012 by LendingClub co-founder Soul Htite, expects to more than double its workforce to 4,200 within 18 months, for example.

And it's not like Chinese banks don't have other, arguably more pressing, issues to deal with. Soured advances are spiraling and capital outflows are accelerating.

Gone Off
Soured debt at Chinese banks has risen sharply over the past five years
Source: Bloomberg

One might argue that financial institutions in the West are facing a similar problem as they grapple with how to retain those slippery millennials. But don't forget, China has them too and they aspire to equally comfortable lifestyles. Asia's biggest economy is also home to some of the banking sector's most exciting upstarts, like Alibaba payment affiliate Ant Financial.

It might be tough for Beijing's old guard to admit, but this talent show just got a lot harder.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Ping An Bank and Bank of Communications are among those employing robots.

  2. That included a $7 million long-term incentive award tied to profitability and spread out over eight years. JPMorgan CEO Jamie Dimon was awarded $27 million last year, including a $5 million cash bonus and $1.5 million salary.

To contact the author of this story:
Nisha Gopalan in Hong Kong at ngopalan3@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net